This story has suddenly exploded into a full blown scandal which, very sadly for me, makes my ex-employer, the Canada Revenue Agency, look like shit.
It starts here with a very favourable secret deal the CRA offered to the KPMG clients;
http://www.cbc.ca/news/business/canada- ... -1.3479594
The Canada Revenue Agency offered amnesty to multi-millionaire clients caught using what's been called an offshore tax "sham" on the Isle of Man — a reprieve that was supposed to remain secret and out of the public eye until it was uncovered by a CBC News/Radio-Canada investigation.
The amnesty allows for "high net worth" clients of the accounting giant KPMG to be free from any future civil or criminal prosecution — as well as any penalties or fines — for their involvement in the controversial scheme.
The clients simply had to agree to pay their back taxes and modest interest on these offshore investments, which they had failed to report on their income tax returns.
Documents show that the scheme had attracted at least $130 million.
CBC/Radio-Canada obtained a copy of the confidential nine-page offer, signed on May 1, 2015 by CRA's manager of offshore compliance, Stephanie Henderson.
It promised KPMG clients that the CRA would not impose any penalties for taxes dodged in a scheme that lasted more than a decade.
This is the best defense the CRA could put up;
CRA practice also recognizes that the earliest possible resolution of disputes is in the public interest, as lengthy litigation is costly to all parties and the outcome of complex, tax-related litigation processes may be difficult to predict," media relations officer Philippe Brideau said in a statement.
I said in an earlier post;
We're well into our third year of those discussions. As an ex CRA guy I get a strong wiff of back-office politics in this with wealthy targets lobbying our federal politicians behind closed doors. If the government was serious about enforcing the Income Tax Act in respect to this scheme it would have taken this to Federal Court at least a year ago. There may be a valid excuse for the delay but "confidential discussions" doesn't cut it. A chat over brandy every six months or so?
And this appears to be the case.
Justifiable outrage from those without the political clout to get secret deals;
Toronto tax lawyer Duane Milot, who represents middle-income Canadians in disputes with the CRA, says his clients are routinely dragged through the courts for years by Canada Revenue.
"It's outrageous," he told CBC News after reading the leaked document. "The CRA appears to be saying to Canadians, 'If you're rich and wealthy, you get a second chance, but if you're not, you're stuck.'"
Whatever the reason behind the offer, it's clear the CRA didn't want anyone else to find out about the amnesty deal.
The leaked document includes the clause CONFIDENTIALITY in capital letters in paragraph 18.
"The taxpayer agrees to ensure the confidentiality of the offer and will not inform any person of the conditions of the offer," the letter states.
"This doesn't pass the smell test," Milot said. "This is exactly the type of government behaviour that erodes the public's confidence in the system, these type of secret deals. Everybody should be treated equally."
The article says;
There are believed to be six more high net worth clients whose identities continued to remain a mystery.
Perhaps they are just waiting for an even better offer.
A practical point. Who in the CRA was stupid enough to think that this would stay secret? When I was an employee I told people not to put anything in their files they did not want made public because everything eventually becomes public. How could an offer of this magnitude and controversy ever be expected to stay secret?
Apparently internal CRA staff wasn't happy about it;
http://www.cbc.ca/news/business/cra-kpm ... -1.3479792
Well tough. In my opinion this wasn't a CRA decision. Something this stupid is a political decision where the CRA is told what they are going to do;
One of the biggest mysteries is who exactly at CRA made the amnesty offer.
The secret deal, leaked to CBC News in a brown envelope, was signed by CRA's manager of offshore enforcement, Stephanie Henderson, and sent to the accounting firm KPMG on May 1, 2015.
But there are conflicting stories as to whether Henderson, or her bosses, made the decision.
Sources tell CBC News that discussions about the KPMG case, which has been in operation for more than 10 years, went high up the line at CRA, far beyond Henderson.
The manager in the offshore division was reportedly holding almost daily briefings for a time in 2015 with high-level officials at the CRA.
"She was pissed that senior leadership backed off and a deal was struck," one source said.
So who were the "high-level officials at the CRA" answering to? But I'm probably wrong in my assumptions about undue political influence on the fairness of the tax system. The officials story is that it was purely a CRA decision without political interference and everybody in the CRA was in happy accord over the deal;
CRA spokesperson Philippe Brideau echoed what assistant commissioner Ted Gallivan told CBC News on Friday — that there was no interference on the file from higher-ups, including from then assistant commissioner Richard Montroy, who was in charge of compliance.
"Officials responsible for the file have confirmed that there was no instance where Mr. Montroy provided direction," Brideau said in an email.
In his own email to CBC News Montroy said: "There were no instances where I failed to support the recommendations and actions of the people who worked in my branch."
Gallivan, the current head of compliance also disputes that there was any internal disagreement prior to the amnesty offer being made.
"We found no evidence of internal disorder or debate," he said.
And the number one guy at the CRA washes his hands of any responsibility;
In an email to the CBC, the CRA's top executive, commissioner Andrew Treusch said: "I note in the strongest possible terms that, as the commissioner of the Canada Revenue Agency, I have never provided direction to CRA officials on the approach to be taken in the management of KPMG litigation or negotiations."
Rather, he wrote, "I have played my normal and required oversight role, which is to assure myself that the CRA's operational approach is grounded firmly by the facts and merits of each case and the legal framework within which the agency operates."
Treusch also said he has "never discussed the KPMG litigation, including any negotiations that may have occurred" with anyone at KPMG at any time.
CBC News had asked the commissioner whether he knew about the CRA's secret settlement offer before it was sent to KPMG.
Brideau, the CRA media spokesman replied: "The commissioner would not review or approve this type of letter as this task is the responsibility of operations managers at the agency."
But other people don't trust the CRA as much as Burnaby49 does and want more than puff-piece comments from buck-passers;
The federal government should call public hearings into why the Canada Revenue Agency offered amnesty to the high net worth clients of KPMG who were involved in an offshore tax avoidance scheme, prominent tax groups, politicians and other legal experts said in the wake of a CBC News/Radio-Canada exposé.
In fact, Laval University tax professor Andre Lareau says the new revenue minister, Diane Lebouthillier, should undo the deal as soon as possible.
"The offer should just be withdrawn right now," Lareau said. In effect, he says, the CRA is saying to these wealthy clients "we're giving you absolution."
In question period yesterday, NDP leader Tom Mulcair called on Prime Minister Justin Trudeau to launch a probe into the secret offer.
"Stop protecting the rich, start protecting a tax system that's fair for all," Mulcair said. "How many other times has this happened, and is the prime minister going to call an investigation?"
http://www.cbc.ca/news/business/public- ... -1.3481677
So the CRA makes an official statement!
http://news.gc.ca/web/article-en.do?nid=1038949
Happily we are now back to being the Government of Canada rather than the Harper Government;
viewtopic.php?f=48&t=11032#p223963
Although, no doubt, the current Liberal government would be happy to pass the blame for the mess back to it's predecessor, the Conservative Harper government.
The CRA's Head of Compliance sees no need to air the Agency's dirty laundry in public.
For his part, Gallivan said that he sees no need at this juncture for public hearings. "I've seen no information that would cause me to recommend or even support a public inquiry."
Gallivan, who only recently became the assistant commissioner in charge of compliance at the CRA, said he was personally unaware of the agency's settlement offer to KPMG clients.
"We completed over 9,000 aggressive tax planning cases last year with a total of $1.6 billion," Gallivan said.
"This is a very important file but it doesn't represent even one per cent of the volume of work we do."
Court records indicate that at least 26 clients parked more than $130 million offshore in the KPMG scheme.
And now every Tom Dick and Harry wants the same sweet deal;
Toronto tax lawyer Duane Milot, who represents dozens of middle-income taxpayers in disputes with the CRA, said this offer shows there is a "double-standard" between how his clients have been treated by the agency compared to these well-off clients of KPMG
.
"I think the CRA has to explain its behaviour," Milot said. "Canadians are entitled to know what the agency is doing, and you can't go around making these sweet deals for millionaires and not explain why you did it."
Milot wants a reprieve on penalties for his clients, who he says were victims of an unscrupulous tax preparer, in light of revelations of the CRA's handling of the KPMG case.
"Because certainly if [the KPMG] clients are entitled to this great deal, my clients are equally or more entitled to it," he said.
I really like this part;
In an email to CBC News last month, Jacques Hudon, director of policy for Revenue Minister Lebouthillier, said it would be inappropriate to provide journalists a briefing on this topic, or to grant an on-camera interview.
"As the matters raised in your correspondence are either before the courts, precede the appointment of the current minister, or are related to administrative matters, it would be inappropriate for her to comment on them," Hudon said.
He added that the CRA had already provided "substantial information" on this matter to CBC journalists.
Reporter Frederic Zalac tried to speak directly to Lebouthillier after she made a public appearance at Winterlude in Ottawa. She again declined to be interviewed, saying the entire matter was before the court.
We'd love to talk about it, we want to tell you our side but unfortunately it's before the court so we just can't discuss it. We'll get back to you. But we Canadian taxpayers shouldn't be concerned. The CRA didn't make a super-special secret deal because the political fix was in but because the CRA was looking out for the best interests of all Canadians by trying to save us money by get the best deal for us without putting us at risk from those hostile courts;
In an earlier response, Canada Revenue's media relations officer Philippe Brideau said in a statement: "CRA practice also recognizes that the earliest possible resolution of disputes is in the public interest, as lengthy litigation is costly to all parties and the outcome of complex, tax-related litigation processes may be difficult to predict."